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Reputation as Capital—How Decentralized Autonomous Organizations Address Shortcomings in the Venture Capital Market

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  • Wulf Kaal

    (School of Law, University of St. Thomas, Minneapolis, MN 55403, USA)

Abstract

Venture capital (VC) models can be optimized with emerging decentralized technology. There are many disadvantages that come with traditional VC fundraising including illiquidity and ownership struggles, as well as timing. This paper will discuss alternative funding mechanisms that may be available and advantageous to emerging businesses. After discussing the shortcomings of the existing VC market and the rise of alternative early round funding mechanisms, the paper highlights the evolution of VC businesses that are operated by a Decentralized Autonomous Organization (DAO). More specifically, models discussed in this article contribute to the much-needed experimentation with venture capital reputation models.

Suggested Citation

  • Wulf Kaal, 2023. "Reputation as Capital—How Decentralized Autonomous Organizations Address Shortcomings in the Venture Capital Market," JRFM, MDPI, vol. 16(5), pages 1-14, May.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:5:p:263-:d:1139939
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    References listed on IDEAS

    as
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    3. Gompers, Paul A, 1995. "Optimal Investment, Monitoring, and the Staging of Venture Capital," Journal of Finance, American Finance Association, vol. 50(5), pages 1461-1489, December.
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    6. Joshua Lerner, 1994. "The Syndication of Venture Capital Investments," Financial Management, Financial Management Association, vol. 23(3), Fall.
    7. Gompers, Paul A., 1996. "Grandstanding in the venture capital industry," Journal of Financial Economics, Elsevier, vol. 42(1), pages 133-156, September.
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